Prime Minister, Dr. Manmohan Singh addressed the nation
today. Following is the text of the Prime Minister’s address:

“My dear brothers and sisters,

I am speaking to you tonight to explain the reasons for
some important economic policy decisions the government has recently
taken. Some political parties have opposed them. You have a right to
know the truth about why we have taken these decisions.

No
government likes to impose burdens on the common man. Our Government has
been voted to office twice to protect the interests of the aam admi.

At the same time, it is the responsibility of the
government to defend the national interest, and protect the long term
future of our people. This means that we must ensure that the economy
grows rapidly, and that this generates enough productive jobs for the
youth of our country. Rapid growth is also necessary to raise the revenues we need to
finance our programmes in education, health care, housing and rural
employment.

The challenge is that we have to do this at a time when
the world economy is experiencing great difficulty. The United States
and Europe are struggling to deal with an economic slowdown and
financial crisis. Even China is slowing down.

We too have been affected, though I believe we have been
able to limit the effect of the global crisis.

We are at a point where we can reverse the slowdown in
our growth. We need a revival in investor confidence domestically and
globally. The decisions we have taken recently are necessary for this
purpose.

Let me begin with the rise in diesel prices and the cap
on LPG cylinders.

We import almost 80% of our oil, and oil prices in the
world market have increased sharply in the past four years. We did not
pass on most of this price rise to you, so that we could protect you
from hardship to the maximum extent possible.

As a result, the subsidy on petroleum products has grown
enormously. It was Rs. 1 lakh 40 thousand crores last year. If we had
not acted, it would have been over Rs. 200,000 crores this year.

Where would the money for this have come from? Money does
not grow on trees. If we had not acted, it would have meant a higher
fiscal deficit, that is, an unsustainable increase in government
expenditure vis-a-vis government income. If unchecked, this would lead
to a further steep rise in prices and a loss of confidence in our
economy. The prices of essential commodities would rise faster. Both
domestic as well as foreign investors would be reluctant to invest in
our economy. Interest rates would rise. Our companies would not be able
to borrow abroad. Unemployment would increase.

The last time we faced this problem was in 1991. Nobody
was willing to lend us even small amounts of money then. We came out of
that crisis by taking strong, resolute steps. You can see the positive
results of those steps. We are not in that situation today, but we must
act before people lose confidence in our economy.

I know what happened in 1991 and I would be failing in my
duty as Prime Minister of this great country if I did not take strong
preventive action.

The world is not kind to those who do not tackle their
own problems. Many European countries are in this position today. They
cannot pay their bills and are looking to others for help. They are
having to cut wages or pensions to satisfy potential lenders.

I am determined to see that India will not be pushed into
that situation. But I can succeed only if I can persuade you to
understand why we had to act.

We raised the price of diesel by just Rs. 5 per litre
instead of the Rs 17 that was needed to cut all losses on diesel. Much
of diesel is used by big cars and SUVs owned by the rich and by
factories and businesses. Should government run large fiscal deficits
to subsidise them?

We reduced taxes on petrol by Rs. 5 per litre to prevent
a rise in petrol prices. We did this so that the crores of middle class
people who drive scooters and motorcycles are not hit further.

On LPG, we put a cap of 6 subsidised cylinders per year.
Almost half of our people, who need our help the most, actually use only
6 cylinders or less. We have ensured they are not affected. Others will
still get 6 subsidised cylinders, but they must pay a higher price for
more.

We did not touch the price of kerosene which is consumed
by the poor.

My Dear Brothers and Sisters,

You should know that even after the price increase, the
prices of diesel and LPG in India are lower than those in Bangladesh,
Nepal, Sri Lanka and Pakistan.

The total subsidy on petroleum products will still be Rs.
160 thousand crores. This is more than what we spend on Health and
Education together. We held back from raising prices further because I
hoped that oil prices would decline.

Let me now turn to the decision to allow foreign
investment in retail trade. Some think it will hurt small traders. This
is not true.

Organised, modern retailing is already present in our
country and is growing. All our major cities have large retail chains.
Our national capital, Delhi, has many new shopping centres. But it has
also seen a three-fold increase in small shops in recent years.

In a growing economy, there is enough space for big and
small to grow. The fear that small retailers will be wiped out is
completely baseless.

We should also remember that the opening of organised
retail to foreign investment will benefit our farmers. According to the
regulations we have introduced, those who bring FDI have to invest 50%
of their money in building new warehouses, cold-storages, and modern
transport systems. This will help to ensure that a third of our fruits
and vegetables, which at present are wasted because of storage and
transit losses, actually reach the consumer. Wastage will go down;
prices paid to farmers will go up; and prices paid by consumers will go
down.

The growth of organised retail trade will also create
millions of good quality new jobs.

We recognise that some political parties are opposed to
this step. That is why State governments have been allowed to decide
whether foreign investment in retail can come into their state. But one
state should not stop another state from seeking a better life for its
farmers, for its youth and for its consumers.

In 1991, when we opened India to foreign investment in
manufacturing, many were worried. But today, Indian companies are
competing effectively both at home and abroad, and they are investing
around the world. More importantly, foreign companies are creating jobs
for our youth -- in Information Technology, in steel, and in the auto
industry. I am sure this will happen in retail trade as well.

My Dear Brothers and Sisters,

The UPA Government is the government of the aam aadmi.

In the past 8 years our economy has grown at a record
annual rate of 8.2 per cent. We have ensured that poverty has declined
much faster, agriculture has grown faster, and rural consumption per
person has also grown faster.

We need to do more, and we will do more. But to
achieve inclusiveness we need more growth. And we must avoid high fiscal
deficits which cause a loss of confidence in our economy.

I promise you that I will do what everything necessary to
put our country back on the path of high and inclusive growth. But I
need your support. Please do not be misled by those who want to confuse
you by spreading fear and false information. The same tactics were
adopted in 1991. They did not succeed then. They will not
succeed now. I have full faith in the wisdom of the people of India.

We have much to do to protect the interests of our
nation, and we must do it now. At times, we need to say "No" to
the easy option and say "Yes" to the more difficult one. This happens to
be one such occasion. The time has come for hard decisions. For this I
need your trust, your understanding, and your cooperation.

As Prime Minister of this great country, I ask each one
of you to strengthen my hands so that we can take our country forward
and build a better and more prosperous future for ourselves and for the
generations to come.

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